Hi Guys,
I have a property that I have renovated and now wish to sell. It is currently being leased by a tenant. I just need clarification on how much Capital Gains Tax will be payable after sale.
Purchase Price : $233,000
Loan amount : $222,000 (95% lend)
Deposit Paid : $11,000
Closing Costs : $11,000
Renovation Costs : $25,000
New Valuation : $320,000
Real estate commission : $8,000I have owned the property for 18 months.
Also, I am looking to refinance one of my other properties and was wondering if it is still possible to refinance up to 95% with mortgage insurance ? I heard that it has now been reduced to a maximum of 90% ?
Thanks heaps,
Bradles
Sale price of $320,000 less
Purchase price of $233,000, less
purchase and selling costs, say $40,000, less
reno costs of $25,000
= profit of about $22,000this is reduced by 50% because you have held it for more than 12 months = $11,000
This $11,000 is added to the owners taxable income, so max tax should be around $5,500.
(my estimate only: I am not an accountant).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Bradles,
The following is an extract of a document off our website that explains further about capital gains tax.
Capital Gains Tax
Capital Gains Tax (CGT) is the tax paid on any Net Capital Gain made on an asset that is sold, and is included in your Income Tax Return. CGT is not a separate tax but forms part of your income tax payable.
The system has changed over the years since inception on 19th September, 1985 so we recommend you seek independent professional advice from your Accountant.
Two methods to calculate CGT
(1) Indexation
Applies to property purchased up to 21 September, 1999 where the cost base is indexed according to inflation.(2) Discount (Current Method)
A 50% discount (on assets held at least 12 months) is applied to your Net Capital Gain. This discounted amount forms part of your taxable income and is taxed at your marginal rate, up to a maximum of 48.5%One third discount applies to Superannuation Funds and there is no discount for Companies.
Keeping records You must keep your records for 5 years from the date you sell the property. Balancing Charge To calculate the capital gain your Accountant may need to reduce the “Cost Base” to the extent that it includes amounts you have previously claimed for Depreciation and Capital Works deductions.
If you are intending to sell a property, we strongly advise that you discuss this issue of GCT with your Accountant before you sell the property, to ensure that you are aware of the CGT implications.What date on the contract is used to assess CGT? The date on the Contract of Sale is used for CGT purposes – regardless of when settlement occurs. Fantastic ! Thanks heaps Terry and Amanda,
Cheers,
Brad
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